Correlation Between Walmart and Banco Bilbao

Can any of the company-specific risk be diversified away by investing in both Walmart and Banco Bilbao at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Walmart and Banco Bilbao into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and Banco Bilbao Vizcaya, you can compare the effects of market volatilities on Walmart and Banco Bilbao and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Walmart with a short position of Banco Bilbao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Banco Bilbao.

Diversification Opportunities for Walmart and Banco Bilbao

-0.43

Correlation Coefficient

Walmart  Banco Bilbao

Very good diversification

The 3 months correlation between Walmart and Banco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Banco Bilbao Vizcaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Vizcaya and Walmart is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Walmart are associated (or correlated) with Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Vizcaya has no effect on the direction of Walmart i.e., Walmart and Banco Bilbao go up and down completely randomly.

Pair Corralation between Walmart and Banco Bilbao

Assuming the 90 days trading horizon Walmart is expected to generate 0.57 times more return on investment than Banco Bilbao. However, Walmart is 1.75 times less risky than Banco Bilbao. It trades about 0.2 of its potential returns per unit of risk. Banco Bilbao Vizcaya is currently generating about -0.05 per unit of risk. If you would invest  157,154  in Walmart on September 27, 2024 and sell it today you would earn a total of  26,348  from holding Walmart or generate 16.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  Banco Bilbao Vizcaya

Walmart

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Walmart showed solid returns over the last few months and may actually be approaching a breakup point.

Banco Bilbao Vizcaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bilbao Vizcaya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Walmart and Banco Bilbao

The main advantage of trading using opposite Walmart and Banco Bilbao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Banco Bilbao can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Banco Bilbao will offset losses from the drop in Banco Bilbao's long position.

The idea behind Walmart and Banco Bilbao Vizcaya pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.